Gartner: India poised for regional IT services growth

India is likely to be the fastest growing market for IT services in the Asia-Pacific region, according to research firm Gartner.

Multinational IT services companies that had set up offshore operations in India would use their local delivery centers not only to serve clients abroad, but also in the domestic IT market, which grew by 15 per cent in 2003 over the previous year, Gartner said.

Indian players had primarily focused on markets outside India, and might need to ramp up capability quickly for capturing the domestic market, Gartner said.

“At a CAGR of 17.3 per cent, India is expected to be the fastest growing IT services market in the region, as compared to the global average of 6 per cent, making it faster than its Asian counterparts, including Singapore, China and Australia,” Gartner's group vice-president and chief of research, Craig Baty, said.

The CAGR (compound annual growth rate) Gartner projects for India compares to 15.6 per cent forecast for China, and 8.7 per cent in Australia, between 2003 and 2008.

Growth in India's IT services market would be driven primarily from government contracts, growing demand from banking and financial services and the manufacturing sector, Baty said.

Other factors helping to boost demand for IT services in India are stable economic growth, increased global competitive pressures on local industry, improved infrastructure and increased investments by multinationals setting up offshore IT and business process outsourcing (BPO) facilities, according to Gartner's principal analyst for IT services and BPO for the Asia-Pacific region, Ravindra Datar.

"Essentially, [Indian companies] should look at playing the volume game, deploying innovative strategies in the SMB sector, and showcase their global successes in the Indian market or risk losing out to global players," he said.

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